With less than a week to go in the legislative session, HB26-1326, the bill to reauthorize the Colorado Public Utilities Commission, passed its final House reading today, 43 Yes to 22 No, and was assigned to Senate Finance this afternoon. The bill began as an expansive power grab, though its worst provisions were trimmed in a rare Saturday session.
The Independence Institute testified against several of these provisions when HB26-1326 first came before the House Energy and Environment Committee in April. Between then and Saturday’s rare weekend floor session, the bill was stripped of two of the most problematic pieces, The Sum & Substance reported.
Early amendments brought the next sunset review closer to historical norms and nixed radical changes to open-meetings procedure. The bill as introduced wouldn’t have seen another PUC review until 2037, an 11-year window. The version that passed the House set the next sunset review for 2033, a seven-year extension. After bipartisan outcry, the bill sponsors also entirely struck its radical provision to allow commissioners to “deliberate privately on adjudicatory matters,” which even the Colorado Office of Policy, Research, and Regulatory Reform (COPRRR) called a “dramatic departure from traditional notions of open meetings.”
The bill, as introduced, would have allowed the PUC to order a utility to securitize assets rather than waiting for a voluntary application. Securitization, when utilities issue revenue bonds rather than recouping costs from the rate base, is currently restricted to wildfire mitigation and coal plant retirements. The original bill would have expanded its scope, with an eye toward securitizing natural gas as future “stranded assets” thanks to Colorado’s state mandates like the Clean Heat Plan.
As Colorado Politics noted, this could have meant 20- to 30-year bond charges on every ratepayer’s monthly bill. Utilities showed up in force to warn that forcing securitization would make utilities less credit-worthy and increase borrowing costs for necessary upgrades. The most recent version strips this provision entirely.
The Colorado Chamber of Commerce, Xcel Energy, Action Colorado, and the Independence Institute have all called for expanding the PUC from three to five members. The current PUC is not geographically or ideologically diverse, and the best interests of rural communities are not well-represented by the current composition. A bill that aims to make the PUC more influential should also seek to ensure that every part of Colorado has a voice at the table at the PUC. An amendment to ensure geographic representation didn’t pass, but the bill now requires an independent third-party study of the PUC’s size, staffing, compensation, and funding to be completed by November 2027.
The bill that passed the House today is better than the one introduced in March. But it wasn’t all good news.
Section 22 retains a provision that expands who can appeal local land-use denials to the PUC. Currently, only PUC-regulated utilities can challenge a county or municipality’s denial of a transmission permit on the basis of statewide need. The reengrossed bill extends that appeal right to municipally owned utilities, cooperative electric associations, independent transmission developers, and independent power producers.
Under current law, the retail rate impact of the Renewable Energy Standard (RES) must be calculated “net of new alternative sources of electricity supply from noneligible energy resources that are reasonably available.” The bill deletes that language, eliminating the only cost guardrail that forces an examination of whether renewables are truly cheaper.
There are also new additions by amendment, none of which are good for the ratepayer. The reengrossed bill creates permanent equity infrastructure at the PUC in Section 7, including a new “equity” analyst position, an equity task force with quarterly meetings, and a mandate to identify “equity impact proceedings.”
Civil penalties against electric and gas utilities, increased from $2,000 to $7,500, are now redirected from the general fund to affordability programs and outreach for income-qualified customers and disproportionately impacted communities. This continues the PUC’s drift from its core mission of setting just and reasonable rates toward a broader social-policy mandate.
Section 48 directs the PUC to open proceedings on integrating gas and electric system planning, including “zonal electrification” and “modifying cost-recovery methods to align utility incentives with relevant public policy objectives such as reducing greenhouse gas emissions.” This is a roadmap for using the PUC’s regulatory apparatus to accelerate building electrification and gas system phase-outs under the banner of “streamlining.” The report is due to the legislature by November 2027. The bill also retains its direction for the PUC to study joint procurement of wind, solar, and storage across its regulated utilities and utilities outside of its jurisdiction.
Section 15 of the reengrossed bill rewrites Colorado’s dormant intervenor compensation framework. Intervenors, which are parties to rate cases other than utilities or government agencies, can now receive attorney fees, expert witness fees, and other costs if the PUC finds they made a “unique substantial contribution” to the record. While some parties might seek to protect the ratepayer through intervening, the practical effect of intervenor funds is that environmental and climate groups are publicly funded for their participation in rate cases.
The bill is in a better place than it was before. Shortening the sunset window and keeping the open meetings status quo are improvements, as is stripping the securitization and third-party contracting mandates. The PUC review bill is likely to sail to passage, but the local control override, the deletion of the RES cost comparison, and the new equity and intervenor infrastructure deserve more scrutiny than the legislature’s sprint to the finish will allow.
